If I am shooting in RAW mode and I add exposure compensation with the camera (20D), is the compensation done via software or is the exposure actually increased/decreased? I know you can adjust the exposure post processing in the RAW converter and was just wondering if that is what the camera is doing as well...

When you set the EC in camera, the camera actually changes f-stop or shutter speed to achieve your aim - it's why there is no EC in manual mode. SO if you're in Aperture priority and use EC you should see the camera-selected shutter speed go up or down. The reverse is true if you're in shutter priority. I can't speak to what will happen in P mode or if EC is even available in the preset modes - I don't use them.

Also, Dustin is right - you can adjust the exposure in RAW converters but you will see image degradation or noise as a result. This is especially true at higher ISOs. If you shoot ISO 800 for instance and you're in-camera exposure is right on the money you get a fairly clean image. However, assume you have that same photo and you need to bump the exposure in the RAW conversion by +1 1/3 - you will see a bigger increase in the visible noise of your photo. Lower ISO, the problem is less but still there.

So bottom line, RAW provides a safety net but you're better off getting the exposure right in-camera.

Thanks. That is what I thought. Just wanted to make sure for some of the tougher backlit shots that the meter doesn't do well with. I have pretty much gone to shooting just RAW now. I don't even bother with jpegs unless I need to download to my Flashtrax. Then it pays because it is too slow with bigger files.